Why Not Opening a Second Location was the Best Decision

second location
Image courtesy of CrossFit Stamford.

In the fall of 2014, our Affiliate, CrossFit Stamford had been in operation for about eight years, and business was booming. I don’t know if this was the peak for other U.S. Affiliates, but for our business it certainly was.

We were the epitome of the large warehouse-style group-class model. We identified as a team that was great at teaching CrossFit. We weren’t interested in providing boot camps, yoga or indoor cycling.

Our classes were packed wall-to-wall in an 8,000-square-foot warehouse. At one point, we had to make the decision to actually close enrollment and start a waiting list for new members. If someone quit, then we’d call the first person on the list and invite them to join.

It was at this time that I, along with my business partner and wife, Kristie, seriously started considering opening another location to capitalize on the demand. We began to research potential new locations, create a cost estimate and marketing budget, and a plan to hire new staff.

We spent countless hours going through the process of visiting potential buildings, creating potential earnings spreadsheets, pricing equipment, rent, insurance and speculating on the long-term sustainability of CrossFit as a brand. We came extremely close to signing a lease on a new location, but in the end we decided not to.

Years later as friends of ours were forced to close their second locations because they weren’t profitable, or using revenue from their original business to pay the additional bills, we would breathe a sigh of relief we didn’t sign that second lease.

Here are the three main reasons we ultimately decided against opening a second location.

1. At that point we weren’t operating as a “real” business.

At the time, my wife and I were still coaching a lot of classes, had personal training clients, were heavily involved in the on-ramp program, and were responsible for all of the admin and behind-the-scenes work. Our staff consisted of two full-time and five part-time Coaches, but their only duties were coaching classes and a small amount of personal training.

It was clear the business relied much too heavily on us the owners. It was not by my definition a “real” business yet, which I would define as being able to operate daily without the input of the owner. The gym was certainly not positioned, at that time, to run without us.

Operating two separate locations would be spreading our already-overworked-selves too thin. We were confident we could make it work, but in the back of our minds there were worries of burnout and biting off more than we could chew.

We honestly didn’t have a well-trained team that could handle the day-to-day activities. Owning a second location would require a manager, head Coach, administrative/front desk staff, and a reliable coaching staff who understood their roles and responsibilities. We needed to focus more energy here, not on a build-out across town. 

2. We didn’t have clearly defined, repeatable systems in place.

To build off of reason No. 1, we realized there was a lot of work to do to organize our business. Yes, we had procedures for how we integrated new members, how we trained our Coaches to run class, but what we didn’t have were systems and procedures that were clearly spelled out for all of the jobs my partner and I handled on a daily basis.

For example, if a member called to cancel or modify their membership, we were the only people authorized to handle it. We didn’t have a proper sales process in place, nor did we have written out retention strategies.

Time-sensitive tasks like returning phone calls, responding to emails from potential customers and current members, updating a member’s credit card or following up on missed payments required my partner and I to be available at all hours and incessantly check our inbox.

Managerial responsibilities such as adjusting the coaching schedule, organizing community events, and ordering and restocking supplies for the retail store were the type of tasks we needed to delegate.

This required creating a standard operating procedure (SOP) manual, hiring a front desk manager, promoting a Coach to the head position, training both of them, and determining benefits and compensation for these new roles.

3. There was still room to increase profits at our current location.

Seriously considering opening a second location forced us to look inward and examine our business. The evening classes were at capacity, but the noon and 7 a.m. time slots were not. How could we incentivize new members to join those classes?

There were afternoon hours when the gym was practically empty and underused. What programs or services could we offer to utilize the space outside of class times?

This examination of the business, and ourselves, made us realize there was still a ton of room to grow in our existing space. Our new focus was to make money every hour the gym was open, not just fill the classes. We created a list of ideas for alternative income streams and started taking action immediately.  

We began by renting floor space during off-peak times to an athletic performance group who specialized in training baseball players. Pretty soon we launched several specialty programs. We completely scrapped our old retail area and built a new one. We added new items, eliminated any product with a short shelf-life, and simplified our inventory and ordering process.

The most impactful change was the move to a personal-training-first model. The first step was to eliminate the group on-ramp classes that we relied on for many years. Instead, we implemented an onboarding program – we called it Kickoff – that consisted of a series of one-on-one sessions. 

With this method, new members got to know their Coach personally and got used to private training right away. Then when they graduated from Kickoff, they might transfer into group classes, but the chances of them opting for personal training were much higher than we experienced when we were using the group on-ramp model. 

Our new focus on increasing personal training business provided our Coaches with income opportunities outside of teaching class, it increased the gym’s revenue, and improved member retention. 

The shift to personal-training-first takes time and effort, but in the long run we found it to be best for the gym’s bottom line and long-term sustainability. A healthy personal training program combined with steady monthly-recurring group class options is a winning combination.

Looking back, the process of opening a second location ultimately led to rapid improvements in our current business, and ended up being one of the best decisions we ever made for the long- term success of our CrossFit Affiliate.  

Andy Parker and his wife Kristie opened CrossFit Stamford in 2006. They were also business consultants, hired to assist launching Solace in New York City. In 2018 they sold their Affiliate and moved to Tampa, Florida. Since then Andy has founded Next Level Affiliates, a website dedicated to helping small gym owners and Coaches improve all aspects of their business. He’s also created the Business WOD, an affordable online business course created specifically to teach owners how to open, grow and eventually sell their gyms. For more details and to connect with Andy, please visit nextlevelaffiliate.blog.